Using the 2-sided search model from Chapter 6, assume that policymakers eliminate Unemployment Insurance b, and instead give a wage subsidy equal to the same amount b but now give it as a wage subsidy rather than as unemployment insurance.

point: the direction of change relative to the initial equilibrium. point: the intuition (not math) explaining this change. for each of the following four variables: i. Real wages ii. Unemployment rate iii. GDP iv. Government expenditures

b. 1 point total: Do you think this would be a good policy change? (1/2 point) Provide a brief economic explanation (1/2 point).